Inflation falls to 2.4%

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Figures issued this morning by the Office for National Statistics (ONS) have revealed the Consumer Prices Index (CPI) fell during April 2013 by 0.4% to 2.4%.

Remaining above the Government's inflation target of 2%, April marked the first month in which CPI has slowed, with falling transport costs, such as air fares and fuel costs, believed to be behind the drop.

The Retail Prices Index (RPI) measure, which includes housing costs, reduced from 3.3% in March 2013 to 2.9% in April.

Despite a fall in CPI, savings rates are still being hit hard by the effects of tax and inflation. Just six accounts, out of a total of 861, currently offer rates that beat the rate of inflation, five of which are cash ISAs.

A £10,000 investment made five years' ago, allowing for average interest and tax at 20%, would have the spending power of £8,860.60 today.

Sylvia Waycot, Editor at Moneyfacts.co.uk, said: "Inflation may be slowing down and the pound in the pocket should in theory buy more than it did last month. However, the pound in the savings account is still being savaged by stagnant returns and above-target inflation.

"It is absolutely shocking that only six ISAs beat or match the rate of inflation. Savers need to get angry. They have been ignored for too long.

"Taking into account the taxman's share and the cost of living, savers need an account paying a hefty 3% before they earn a real rate of return and yet the average no notice savings account only pays a paltry 0.72%.

"In contrast, a year ago, there were 127 ISAs and 32 standard accounts that beat tax and inflation despite BoE base rate being static at 0.5% and CPI standing at 3.00%.

"We are in the early part of a new tax year and savers should look to use up all of this year's ISA allowance, that way they at least don't have to share their returns with the taxman," she said.